Retail investors are Jiangsu Rutong Petro-Machinery Co., Ltd's (SHSE:603036) biggest owners and were hit after market cap dropped CN¥439m

Key Insights

• Jiangsu Rutong Petro-Machinery's significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• 43% of the business is held by the top 24 shareholders
• Insider ownership in Jiangsu Rutong Petro-Machinery is 32%

If you want to know who really controls Jiangsu Rutong Petro-Machinery Co., Ltd (SHSE:603036), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 57% to be precise, is retail investors. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While insiders who own 32% came under pressure after market cap dropped to CN¥3.2b last week,retail investors took the most losses.

In the chart below, we zoom in on the different ownership groups of Jiangsu Rutong Petro-Machinery.

See our latest analysis for Jiangsu Rutong Petro-Machinery

What Does The Lack Of Institutional Ownership Tell Us About Jiangsu Rutong Petro-Machinery?

Institutional investors often avoid companies that are too small, too illiquid or too risky for their tastes. But it's unusual to see larger companies without any institutional investors.

There are many reasons why a company might not have any institutions on the share registry. It may be hard for institutions to buy large amounts of shares, if liquidity (the amount of shares traded each day) is low. If the company has not needed to raise capital, institutions might lack the opportunity to build a position. Alternatively, there might be something about the company that has kept institutional investors away. Jiangsu Rutong Petro-Machinery might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.

Jiangsu Rutong Petro-Machinery is not owned by hedge funds. The company's largest shareholder is Jiangxi Hanyi Technology Co., Ltd., with ownership of 12%. In comparison, the second and third largest shareholders hold about 11% and 3.8% of the stock. Bo Bing Xu, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

On studying our ownership data, we found that 24 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Jiangsu Rutong Petro-Machinery

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

It seems insiders own a significant proportion of Jiangsu Rutong Petro-Machinery Co., Ltd. Insiders have a CN¥1.0b stake in this CN¥3.2b business. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, mostly comprising of individual investors, collectively holds 57% of Jiangsu Rutong Petro-Machinery shares. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Private Company Ownership

We can see that Private Companies own 12%, of the shares on issue. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Jiangsu Rutong Petro-Machinery better, we need to consider many other factors. For instance, we've identified 1 warning sign for Jiangsu Rutong Petro-Machinery that you should be aware of.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.